It has been described as the darkest chapter in Victoria's legal history, an exemplar of all that is terrible with class actions in Australia. A case of greedy lawyers who found their golden egg in a group of retirees who had lost their life savings, never thinking the chickens might come home to roost. Until now.
On Monday, almost nine years after a class action was filed over the 2012 collapse of Kyabram- based lender Banksia Securities, the Victoria Supreme Court will hand down judgment that could deliver to group members tens of millions of dollars in compensation, provide the basis for criminal investigation of the legal team and restore faith in the justice system to deal with practitioners who put a stain on the profession.
The case is the stuff of fiction. The protagonists -- a retired nurse and her lawyer son, who in early 2018 questioned the $17.5 million in costs sought to be deducted from a $64 million settlement with Banksia's trustee. The accused villains -- a MinterEllison lawyer turned class action funder and a silk of the Victorian bar once destined for the bench, who allegedly masterminded a scam to defraud the lender's aggrieved investors, the very people they represented, and deceive seven judges along the way.
Like the heroes in books, Wendy and Chris Botsman confronted their share of obstacles: other retirees who saw their efforts as an impediment to timely compensation; a court that initially disregarded their objections and approved the settlement, hefty fees and all; and the rogue lawyers running the case, who threatened to bankrupt them with millions of dollars in costs if they kept making trouble.
But the Botsmans and fellow objector Keith Pitman persevered, prevailing in a challenge to Justice Clyde Croft's settlement approval in the Court of Appeal, which upheld the settlement itself but sent the case back to Justice John Dixon for reconsideration of the $12.8 million in commission and $4.75 million in costs sought by Australian Funding Partners Limited.
The figures included a whopping $2.5 million in fees for senior barrister Norman O'Bryan, the "pedigreed and privileged" son and grandson of former Supreme Court judges. Holding that the judge's conclusion that the costs were fair and reasonable could not stand "in the absence of the scrutiny that the issues demanded", the appeals court criticized Justice Croft for failing to appoint a contradictor who would have put the funder's payout under a microscope.
Justice Dixon did not make the same mistake. He appointed the dogged Peter Jopling QC and counsel Jennifer Collins to the contradictor role to assist him in scrutinising the sums and, in September 2019, gave the barristers wide latitude to investigate "serious questions" regarding the conduct of O'Bryan, AFPL founder Mark Elliott and junior counsel Michael Symons.
Jopling and Collins were thwarted in their efforts to obtain evidence.
The accused lawyers vigorously fought to limit the contradictors' powers of investigation. Just two days after he claimed in February 2020 to have a long-standing practice of deleting his emails, Elliott died in a vehicle accident now under investigation by the coroner, having potentially scrubbed relevant and incriminating documents. A subsequent search of his phone and computer revealed nothing helpful.
The consultant engaged by Elliott to prepare the misleading costs report relied on by Justice Croft took his own life in September last year. Some retirees, including World War II veterans, have died too, waiting for an end to this sorry saga.
But the contradictors, despite what they said were brazen attempts by the accused to conceal the true facts, uncovered a trove of evidence pointing to a conspiracy to conceal major conflicts of interest, to rely on the work of Banksia's special purpose receivers, to pad their bills, to lie about their costs agreements, to bake their windfall into a take-it-or-leave-it deal and to mislead the court over and over.
"The contradictors, through their own industry, resilience and tenacity, have uncovered misconduct of a shocking and egregious kind," wrote Jonathon Redwood SC, counsel for the special purpose receivers, in submissions at the end of trial in March.
"It is misconduct that has debased the administration of justice, abused the representative proceeding regime, betrayed the solemn trust that the court places in its officers, and brought the justice system into disrepute."
Talking to Lawyerly, the Botsmans said they hoped Monday's judgment would deliver finality for Banksia's debenture holders.
"They have been kept out of their money for far too long," they said.
'Deliberate deception' of the court
The class action was filed by Elliott on behalf of investor Laurence Bolitho and other debenture holders who lost hundreds of millions of dollars when Banksia went into receivership in October 2012 owing $663 million. As with his other class action ventures, Elliott enlisted O'Bryan, his former MinterEllison colleague, to act as senior counsel for the class. Symons came along, as he always did, as O'Bryan's junior.
In December 2014 Justice Anne Ferguson, now the chief judge of the Supreme Court, ruled that Elliott and O'Bryan should not act for Bolitho because both had a financial interest in AFPL. The conflict of interest had killed some of Elliott's earlier class actions, against companies including Treasury Wine Estates, WorleyParsons and Leighton Holdings.
The court was later told at a hearing that Elliott was no longer representing Bolitho, having retained Portfolio Law's Anthony Zita to act as solicitor. O'Bryan's wife, who held $500,000 in shares in AFPL, was said to have sold her interest in the funder so that the silk could continue to be briefed on the matter.
According to the contradictors at trial, Zita was nothing more than a "post box" and Elliott maintained control of the litigation behind the scenes. O'Bryan's wife never disposed of her shares in AFPL, the court heard, and O'Bryan secretly kept an interest in the funder while acting as senior counsel for the class.
"Justice Ferguson was led to believe that the conflicts of interest... had been properly addressed, when in fact they had not been properly addressed, and two of the court's officers, namely Mr O'Bryan and Mark Elliott, had deliberately set about to deceive the court that they had acted in accordance with the court's ruling," the contradictors said.
A partial settlement of $13.25 million with Banksia's directors, auditors and advisers was reached by Bolitho's team, with the help of the special purpose receivers, in April 2016. The $64 million Trust Co settlement followed a year and a half later.
In order to get Justice Croft to sign off on the agreement, Elliott engaged Trimbos to write a report on the reasonableness of the funder's cut and proceeded to arrange for bogus and inflated invoices from O'Bryan, Symons and Zita to be given to the costs consultant, the court heard.
The lawyers were allegedly working on no-win, no-fee arrangements with AFPL, which were also concealed from the court. Over the course of a week in November 2017, Elliott allegedly arranged for O'Bryan to draft $2.5 million in invoices.
Emails between the pair reveal the depths of the alleged deception, including one from Elliott advising O'Bryan to "up your rate to $15K per day" after the barrister's initial attempt to quantify his fees would have earned him just $1,049,300.
Justice Croft approved the deal in January 2018. Botsman bravely took her objection to the appeals court despite intimidation from the lawyers, who, to safeguard their stake in the case and hide their alleged wrongdoing, went so far as to bring an injunction application to block her from appealing and claim damages against her.
"I fully expect to own a holiday house in Magill SA in due course, that being the current home of Wendy Botsman," Elliott boasted in an email to his son, Alex, and special purpose receiver Paul Lindholm.
Elliott's scare tactics came to nothing.
"We were just lucky we had Chris Botsman come along and expose all of this," Pitman, an 85- year-old former bus driver from Ballarat whose family lost $50,000 with Banksia's downfall, told Lawyerly.
Pitman travelled back and forth to Melbourne to attend the appeals court hearing before Justices Pamela Tate, Simon Whelan and Richard Niall and watched closely last year's virtual trial before Justice Dixon. There were about 1,400 investors in Banksia from Ballarat -- war veterans, widows, church clubs among them. Pitman invested $20,000, his son another $30,000.
"A lot of people have been affected. That's the reason I took up the cudgels," Pitman said. His objection to the settlement would prove to be on the money. AFPL's commission, he had argued, appeared to be "grossly excessive" and he, as a Banksia debenture holder and group member, had not been able to verify the legal costs and disbursements claimed by the funder.
Elliott and O'Bryan's alleged deception continued before the Court of Appeal, and included the drawing up of fake cheques during the proceedings to account for some of the fees said to have been earned. But the judges were not persuaded to give them what they wanted.
"Even before this court, the issues have not been ventilated to the extent necessary to enable the court to be satisfied that the claimed payments for commission and legal costs are appropriate distributions to be made from the settlement sum," they said.
AFPL sought special leave to the High Court to review the appeals court's decision, but the High Court dismissed the application.
'Without any regard to their duties'
If the events leading up to the hearing before Justice Dixon in July last were not sensational enough, the trial -- livestreamed because of COVID-19 restrictions -- proved to be made for viewing.
In the opening scene counsel for AFPL, Sam Horgan QC, told the judge the funder admitted it misled Trimbos about its costs after all, and that this in turn led to the deception of the court.
But he insisted its commission should not suffer because the misconduct occurred after, not before, the litigation settled.
"The misleading of Mr Trimbos, which is admitted, which leads to the misleading of the trial judge, that all occurred after the settlement was achieved, so occurred after the contract was performed and executed," Horgan said.
According to Jopling in his opening submissions, AFPL, O'Bryan, Symons, and Zita abused the courts processes and breached their overarching obligations and their paramount duty owed to the court to further the administration of justice when they misled Trimbos. This was conduct that disentitled the funder to any commission, he said.
The barristers and Zita breached their duty to act with independence, and their fiduciary duties of care, skill, competence and diligence owed to Bolitho and group members. Their actions were capable of constituting unsatisfactory professional conduct and professional misconduct, said Jopling.
"The most striking feature of the course of conduct they pursued is that it involved each of them as lawyers acting dishonestly and without any regard to their duties to their clients or their paramount duty to this court," Jopling said, adding that were it not for a few "brave" individuals, they may well have escaped detection.
At the conclusion of Jopling's submissions, Justice Dixon told the parties that in the event the allegations were established it remained a question as to whether "certain parties" were fit to continue to practice.
"One thing that has troubled me in listening to all of this is the question of whether certain parties are fit and proper persons to remain on the roll of practitioners in this court," he said.
It is expected the judge on Monday will at a minimum strike O'Bryan and Symons from the roll of practitioners and the roll of barristers of his own motion.
The barristers, themselves, will be expecting that much at least. After the openings, O'Bryan, who was set to take the stand, surrendered, telling the court in early August through his counsel that he abandoned his defence and wished to express remorse for his actions.
"We're instructed to record that in taking this course Mr O'Bryan seeks to convey and give some measure of effect to his contrition and his very deep regret for his actions," David Batt QC told the court.
Batt said his client consented to any punishment Justice Dixon deemed fit, including disbarment.
A week later Symons conceded defeat and said he too should be disbarred. Symons no longer contested the allegations and the court was free to make findings and grant compensation as it saw fit, his counsel, Robert Craig SC, said.
The capitulations kept coming, with AFPL telling Justice Dixon that it would no longer pursue its application for commission, nor the fees of the barristers, but only those costs not disputed by the contradictors.
During the trial it emerged that Mark Elliott's 28-year-old son, Alex Elliott, might also have had a role in the misconduct. Alex's name was "littered" across court documents, the court heard. He worked for both AFPL and as a lawyer with his father's law firm, Elliott Legal, and was "integrally involved" in the class action.
The "right hand man" of his father, Alex issued the summons for approval of the class action settlement; had a role as the contact person for the law firm on record in the class action; and sent the expenses spreadsheet to his father that served as the "master plan" for what the legal team were going to charge, the contradictors said.
Justice Dixon joined Alex and Trimbos to the proceedings, saying the court had power to act under its own motion under section 30(2) of the Civil Procedures Act and "in the circumstances that's what I'm going to do".
"I'm going to join Mr Alex Elliott as a party to this proceeding on the basis that he is in breach of the overarching obligations and that it is necessary to consider the extent to which he might be liable to pay compensation," he said.
"I've also formed the view that Trimbos ... is subject to the overarching obligations under section 10 and I think there is a case that can be articulated against him as well."
'Never put two and two together'
Trimbos died before he put on a defence after being joined, and a lawyer for his insurer argued that the claims against him had not survived his death.
Alex Elliott sought to have Justice Dixon recuse himself from hearing the case against him. The judge, he said, appeared to take "a very dim view" of him in remarks he made from the bench, and a "situation of ostensible bias" had been established, according to his counsel, Noel Hutley SC.
When the application was unsuccessful, and a subsequent appeal failed, he hired criminal barrister Andrew Palmer QC to represent him.
Palmer proceeded to paint a picture for the court of a young and inexperienced lawyer who looked up to his dad and never thought to question him. Alex would explain to the court why he may not have understood that there was something wrong going on, "given the maturity of the people he was dealing with", Palmer said.
The case would come down to his client's credibility, Palmer said. He argued that Alex should be given the chance to give his evidence in chief on the stand and in person, to have the court "hear him in his own words". Justice Dixon agreed, and on December 1, 2020 the parties appeared in the courtroom together for the first time during the trial.
Alex spent days in the witness box, telling the court he "idolised" his dad and never put two and two together.
Asked by Palmer whether he thought his father had integrity, Alex said he "had no reason to doubt" it.
"Did you believe your father was an honest person," Palmer asked.
"Yes, I did," he said.
Alex conceded that he might have uncovered the deception had he observed the conduct of his father and the barristers with a critical eye, but said there would have been little he could have done to change the course of events.
"I'm not sure I could have done anything or influenced the outcome," he said.
What Justice Dixon could do
As the special purpose receivers noted in their closing submissions, there is "no real doubt" that the judge in his ruling on Monday will make orders for costs and compensation in favour of Banksia's 16,000 debenture holders.
"On the contradictor's case, orders for costs and compensation under section 29 of the CPA should be made significantly exceeding $20 million. In light of what has transpired, the special purpose receiver strongly supports the contradictor's position in that regard," Redwood wrote.
It is likely findings of breaches of duty will be made against some or all of the accused, and it's possible that the conduct of some of the lawyers will be referred to Victoria's Legal Services Commissioner, Fiona McLeay, for investigation.
Justice Dixon could also refer the conduct directly to the Australian Securities and Investments Commission and the Director of Public Prosecutions to investigate potential fraud. O'Bryan and Symons could face possible criminal charges of procuring a financial advantage by deception. Alex Elliott could face claims that he aided and abetted the barristers.
The judge may not refer the conduct to the authorities, but his findings could provide a basis for criminal investigation nonetheless.
The judgment is not likely to be the end of the case, however. If findings of liability are made against Alex, it is expected he will seek leave to appeal, potentially holding up final recovery further.
And there is another snag for the receivers in recovering any funds awarded, a "fundamental problem", as Redwood put it. The accused are crying poor.
"AFP, and Mr O'Bryan, Mr Symons and Mr Zita appear to be unable to meet orders for costs and compensation against them in view of their financial position," he said.
"That this is the position is itself scandalous, particularly in relation to AFP. It would appear that at least in the case of AFP and Mr O'Bryan, what assets that might have been available have been dissipated in legal costs."
The court was told that AFPL, represented by Arnold Bloch Leibler, has spent well over $3 million in legal fees up to June 30, 2020.
"Substantial amounts it has received in funding commissions in other class actions during the course of the remitter have apparently gone to meet ABL's and counsel's legal fees in the remitter...Of course, all of that expenditure on legal fees resulted in nothing but ultimate capitulation."
Justice Dixon will be asked to approve a proposed non-party costs summons against the estate of Elliott and Elliott Legal to recover the amounts awarded.
"In reality and substance, AFP and Elliott Legal were Mr Elliott's alter egos, deployed by him as critical instruments in the fraud as and when necessary. The scheme alleged, and ultimately proved, by the contradictor was a joint enterprise between Mr Elliott, his entities (AFP and Elliott Legal), Mr O'Bryan and Mr Symons," Redwood said.
The receivers also intend to pursue funds under policies held by the accused with the Legal Practitioners Liability Committee. The limit of liability under each of the seven separate policies is $2 million, much of which has been eroded in defence costs, but the receivers intend to argue that the limit applies for each separate "loss" and that there are multiple losses giving rise to claims under the policies against each of the lawyers.
The contradictors have urged Justice Dixon not to apportion liability, as the accused have sought, but to award damages against all of them on a joint and several basis. Debenture holders, they say, should be entitled to fully recoup their losses to the maximum extent possible.
"AFP, Alex Elliott, the lawyer parties and Mr Trimbos all sailed together as a flotilla throughout this litigation, until like flotsam they foundered on their misconduct and deception. They were a tight- knit group of scoundrels, working on numerous cases together over the eight year period of this litigation," they said.
"They all now point variously to one another, asserting that the others are more liable than they. What distinguishes this case from the common case where rogues fall out is that all were members of our honourable profession. If each is not held fully responsible for the consequences for their actions, then the debenture holders who were their clients will lose out. One asks rhetorically: why should that be allowed to happen?"
AFPL is represented by Samuel Horgan QC and Christopher Tran, instructed by Arnold Bloch Leibler. Banksia's special purpose receivers John Lindholm and Peter McCluskey of KPMG are represented by Robert Dick SC and Jonathon Redwood SC, instructed by Maddocks. Contradictor Peter Jopling QC and Jennifer Collins are instructed by Corrs Chambers Westgarth. Portfolio Law and Anthony Zita are represented by Christian Juebner and Georgia Berlic, instructed by Colin Biggers & Paisley. Alex Elliott is represented by Andrew Palmer QC, Angel Aleksov, and Geoffrey Kozminsky, instructed by Garland Hawthorn Brahe. Peter Trimbos is represented by Anton Trichardt, instructed by Lander & Rogers.
The class action is Laurence John Bolitho v Banksia Securities Limited (receivers and managers appointed) (in liquidation) & Ors.
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